About 40 percent of American college students are 25 years of
age or older, indicating it is never too late to seek a college
degree. In order to pursue that degree as a working adult, you
will not only need to find the time, but the financial resources
Take heart; where there is a will, there is usually a way. With
the help of scholarships, grants, loans and other aid programs
working adults can fulfill their dream of earning a college
degree, even if they lack the financial means.
The American Opportunity Credit covers up to $2,500 of qualified
education expenses per year for the first four years of
postsecondary education (100 percent of the first $2,000 and 25
percent of the second $2,000).The student must be pursuing an
undergraduate degree or some other recognized credential and be
enrolled at least half time.
The Lifetime Learning Credit covers up to $2,000 of qualified
education expenses (20 percent of the first $10,000). Whereas the
American Opportunity Credit is for the first four years of
college, the Lifetime Learning Credit, as indicated, can be used
through the taxpayer's lifetime. It is more liberal in its
definition of qualified education as it can be used for most
education to acquire or improve job skills and is not limited to
degree oriented studies.
The Internal Revenue Service (IRS) also offers tax deductions of
up to $4,000 for qualified education expenses, and up to $2,500
on student loan interest. Consult a tax adviser or a student aid
adviser at the college or institution to which you plan to apply
to learn more about eligibility.
Grants and Scholarships
The Federal Pell Grant Program provides need-based grants of up
to $5,500 to low-income undergraduates. Pell Grant recipients may
also qualify for an Academic Competitiveness Grant and/or a
Federal Supplemental Educational Opportunity Grant. Meanwhile,
some colleges and universities convert non-federal school loans
into non-federal grants if the student remains in school and
Scholarships "are numerous and can also be quite generous," said
FPA member Joe Pitzl, a financial planner at Intelligent
Financial Strategies in Edina, Minn. You can find scholarship
information on the Education Department's website . Also,
research scholarships offered by your home state. Additionally,
contact the financial aid office at the school you are
considering attending for information about specific scholarship
and grant programs offered through that school. Some colleges
offer bargain tuition rates to older students.
"Seek subsidized loans first because they tend to offer the
lowest rates," said Pitzl. Subsidized and Unsubsidized Stafford
Loans are a popular funding vehicle for college students
providing up to $12,500 per year at rates ranging from 3.4 to 6.8
percent. Students may also qualify for a low interest Federal
Perkins Loan of up to $5,500 per year.
Students who are not eligible for federal funding might qualify
Private loans, such as a home equity line of credit, are another
option for funding college, but should be used judiciously and
Avoid using credit cards to cover education costs and be cautious
about all kinds of student loan debt, advised Pitzl. "Just
because they will lend you a certain amount does not mean you
should take the full amount, because it could leave you with a
pretty hefty debt once you are done with school."
Using Retirement Funds
The IRS allows individuals to take distributions from an
Individual Retirement Account (IRA) for qualified higher
education expenses without having to pay the 10 percent tax
penalty. However, taking such a distribution is a taxable event
and may push you into a higher tax bracket.
Your life experiences could earn you college credit at some
institutions. Check with that school for further information.
Although the cost of higher education can be daunting, there are
several options to help you through the next several years.
Knowing where to start is sometime the hardest part. The
information above can help you take the correct step towards
finding the proper funding for your college dreams.